The SEC suffered a significant loss last week in its ongoing legal battle with Ripple over the XRP digital token. While the District Court held that Ripple’s initial sales of XRP to institutional investors constituted the sale of unregistered securities, it was a Pyrrhic victory as the court held
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UK Financial Conduct Authority Consults on Its Financial Promotion Rules for Cryptoassets and Other High-Risk Investments
On 19 January 2022, the UK Financial Conduct Authority (“FCA”) published a consultation paper (CP22/2) (the “Consultation”) setting out its proposals to strengthen its financial promotion rules for high-risk investments (including cryptoassets), as well as for authorised firms which approve and communicate such financial promotions. The Consultation builds on feedback received to its discussion paper (DP21/1) on how the FCA could strengthen financial promotion rules and also forms part of its ongoing work on addressing harm in the consumer investment sector, to pursue its Consumer Investments Strategy as published in September 2021.
The proposals set out in the Consultation relate to financial promotions for “high-risk investments,” being those which are subject to marketing restrictions under the FCA rules. This includes investment based-crowdfunding, peer-to-peer agreements, other non-readily realisable securities, non-mainstream pooled investments and speculative illiquid securities. The FCA has also confirmed that these will also include cryptoassets once they are brought into scope of the FCA’s financial promotions regime. Some of the key changes the FCA is seeking to implement, as set out in the Consultation, are as follows: